The industry is a bit too smitten with trendy business lines such as subprime and high-loan-to-value lending, warns Richard M. Riccobono, the new second in command at the Office of Thrift Supervision.

"Bankers remind me of little kids playing soccer," said Mr. Riccobono, 40, who was named OTS deputy director in May. "Too often they're grouped in a cloud of dust chasing the ball. Coaches always warn them to spread out and hold their positions. But what happens? They're all together, kicking at each other."

The Long Island, N.Y., native, a lawyer and accountant, came to Washington after eight years as the agency's Southeast regional deputy director in Atlanta. Previously he had spent five years as legal counsel to the Federal Home Loan Bank of Boston and worked at the accounting firm Deloitte & Touche.

"There's no one better qualified to take on the agency's supervision responsibilities," said his former boss, OTS Southeast Regional Director John E. Ryan, who served as acting head of supervision at the agency for the first half of the year. "He's also honest and has no problem telling it like it is. Management at the institutions we supervise will appreciate that."

As the agency's first deputy director, Mr. Riccobono oversees supervision, budgeting, facilities, and human resources. The position was created this year by OTS Director Ellen S. Seidman.

Like regulators at other agencies, he worries that banks and thrifts are too eager to offer credit to high-risk borrowers or grant loans backed by little to no collateral.

"It's a very strange environment when credit-impaired borrowers are sought-after customers," he said in a recent interview. "This type lending has always been out there, but it wasn't funded by insured deposits."

What's more, margins are diminishing quickly as these high-risk markets become more competitive. "There once was a nice spread so lenders could take these risks and still make nice buck; now that's changing." Thrifts, in particular, must be on guard, he said, because they have relied on plain-vanilla mortgage lending for decades and are not used to dealing with products with high levels of credit risk.

The new business lines have the OTS, along with other regulators, scrambling to design examination guidelines to ensure the industry keeps a handle on the higher-risk products.

"A lot of home equity funding is going into debt consolidation," he said. "Numerous credit card customers are charged to the max and looking for ways to make lower payments. They've gone from putting their credit cards on the line to putting their houses on the line."

What's more, in an economic downturn, state legislatures-to prevent a flood of people from being tossed out of their homes-may limit the ability of banks to foreclose, he said.

"These are very good times economically, so maybe most people look at regulators as being like the Maytag repairman," he said.

"But in reality we're very busy with issues we haven't tackled before."

The bevy of issues also includes ensuring thrifts protect their data systems from the year-2000 computer bug, establishing privacy guidelines for electronic banking, and revising rules to guard against systemic risks from loan securitizations and recourse agreements.

He said the agency is under the most pressure from consumer activists and lawmakers, who are concerned about charters being given to insurance and other nonbank companies.

"Privacy issues resulting from companies that plan to cross-sell banking and nonbanking products are troubling some people," he said. "We have to make sure the consumer is getting a straight story. So sales incentives can't be such that investment advisers make more profit selling proprietary products of the company rather than what's right for the customer."

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